Thursday, 25 February 2010

Editorial: Preowned & Project Ten Dollar

The debate over the second-hand (preowned) market has been a thorn in the side of both retailers and publishers. With supermarkets selling games at below cost price, retailers have responded by pushing preowned further into the public eye, and publishers are left feeling short-changed by the lack of any income via sales of used games, determined to claw back some of the money they have lost, which once would be found in selling brand new releases of older titles at cheaper prices. All the while retailers are constantly upping their prices of preowned games whilst reducing or keeping the trade-in price low. Consumers on the other hand are buying more games than ever, playing through more, and exchanging them more regularly as to keep being able to purchase new titles as soon as they are released.

It’s all a bit on the messy side, with different views held up high by all three parties, and a behind the scenes battleground between retailers and publishers, consumers caught right in the middle. As always with such complex matters, it’s neither simple, not elegant finding a solution, and sometimes perhaps, requires all individuals concerned to give up a little in order to do what’s best for everyone in the long run.

At the forefront of this is something EA like to call ‘project ten dollar’. It is a policy which entails the company providing a sizable chunk of downloadable content for a game at launch, for no extra cost to the consumer, redeemable via a download code contained inside the box. The first release to feature this was Mass Effect 2 with a code for the ‘Cerberus Network’ included in the box, and this will be repeated with the forthcoming Battlefield Bad Company 2, which is said to include a large chunk of DLC available from day one, all included for your standard £39.99 when you buy the game. Like with most DLC codes it can only be redeemed once, so anyone buying the game used will have to fork out $10, or what will probably be around £10 in British money, to get the extras.

Sony however, seem to be taking things a step further, by actually making standard features locked out on the actual game discs, until the gamer uses a redeem code inside the box to enable access. The game in question is the latest Socom title for PSP, in which the multiplayer mode is locked out until you activate the code contained in the box online. For users who purchase a preowned copy, they are expected to pay up a fee of around $20 to get the code from Sony. Now seeing as Socom is a primarily online title it isn’t as bad as it sounds, although not allowing people to play what is arguably the point of the game just because they bought it second-hand, is perhaps just a bit too unreasonable for many consumers to accept.

The EA system however doesn’t sound too shabby, and actually provides a good reason for you to pay up a few quid extra over a second-hand copy for the privilege. Certainly for people like me who only buy new (unless it’s sealed) can feel rewarded for supporting developers, and hopefully which will lead to new IP and more niche titles being made - though I’m sceptical on this front. It’s almost a win/win situation, except for the fact that not everyone can afford to buy a new game at launch.

There are many gamers who rely on trade-ins to be able to afford new releases, and part of that appeal is a reasonable trade in price, one which brings down the cost of the game to that of a much older title. For example, after playing Bioshock 2 I could trade that game in for around £22 and get the money off something like Heavy Rain, paying only £18 rather than the full £40 if I were just to buy the game outright. For younger games, students, and people who aren’t on a high income, it allows them to purchase a greater number of games per year than if they couldn’t trade their old ones in. The publisher’s still get their share of the profits by the retailer buying stock of the game in the first place, and the gamer goes home happy because they’ve saved some money. It could be argued that more people trading in equals more people buying games. In addition it also means that more people are likely to spend their money on unproven titles rather than just the big AAA releases, which surely benefits new IP to an extent.

However the grey area, and the one that is offensive to so many publishers, is the fact that once a game is traded-in and sold by the retailer, they make absolutely no money from that sale. In addition if a consumer trades-in their old games for a preowned title, the publishers make no money. The worst cases are when gamers are trading in a copy of last week’s new release for a preowned version of this week’s newest hit, traded in only a few days after release and sold for a huge mark up by the retailer. Again the publishers don’t see any of those profits. Also an added problem with this, is that they cannot judge how well a game that didn’t do well at launch has sold later on down the line. Titles like Mirrors Edge and Dead Space have become cult classics (especially Dead Space) through strong sales of cheap preowned versions, brought on by via word of mouth recommendations, and good reviews about the game by the press. Of course, it would help that publishers were at least getting a cut of these late sales, as it would help in funding future new projects based on new ideas, or niche avenues.

The big issue here, is that many publishers and people inside the industry believe that preowned games de-value the price, and perceived worth of new releases, especially when the mere notion of trading-in week on week for new titles incites that your hard-earned work, costing millions of dollars, becomes effectively nothing more than a disposable item, rather than something for people to keep and enjoy over a long period of time. This is something the likes of EA and many other publishers are trying to reverse. You only have to look back as little as seven or eight years ago, when new versions of games were still selling quite well as a brand new item months after release, yet at a reduced price which still gave the publisher back some income, whilst providing a cheaper alternative for consumers. Effectively you could keep selling a new version of the game for much longer than you can now, benefiting all of the industry whilst at the same time allowing games to consistently pick up older titles without the lottery of seeing if they had been traded in.

This is something that I myself would like to see, a greater selection of new stock available in store when compared to the huge selection of used available, not always in good condition. Indeed, when browsing non-specialist stores there seem to be many back catalogue titles available new, whilst at the big specialist chains you mostly only have the option of buying an alternative second-hand copy.

So what if ‘Project Ten Dollar’ does become a success for publishers, what will that mean for the industry?

For retail, initially it would have the effect of reducing the selling price of preowned games; in addition the trade-in price would also be lowed to maintain the sometimes-ridiculous amount of margin retailers make on, to keep profits up so new releases can be sold for less than RRP to compete with supermarkets and other discount happy outlets. It would also mean an even harder push towards the cheaper preowned alternative as well as accessories sales, damaging the once good customer service even further into the hard sales culture it has become.

Consumer wise, they would benefit by getting extra content previously reserved for quick release DLC a few months down the line, an added extra to say thank you for buying new. Although some publishers and developers may try to cut down the game intentionally to promote this ‘benefit’, when in reality you could be ending up with exactly the same product before this whole ‘Ten Dollar’ idea came to market. It might also become harder for certain gamers to be able to afford new releases, instead choosing to wait until the price goes down on the new version, or instead just buying a cheaper preowned copy after a price reduction, sans later buying the DLC. Alternatively people may be turned further towards piracy and illegal downloading, chipping their consoles to get their fix. Of course most will simply, I imagine, be more than happy to pay up the full £40 more often, especially if it means that they will see the money being channelled into new ideas and IP in addition to the usual AAA blockbuster releases (I know that I would).

Publishers will naturally get a greater slice of the retail pie than with what there getting at the moment, so long as sales of new titles don’t slow down as people may decide to hold off buying, or simply may no longer have the money to do so. In effect publishers could go back to having a new copy available in the shelves for longer, gradually over the year reducing its price in small increments allowing more gamers to pick up the title as an alternative to preowned, thus making more income from the same title over and over. This potentially would mean the end of selling large AAA titles such as Call Of Duty for the full £40 some two years after its release, especially if they don’t want customers picking up the cheaper used alternative.

These however, are only some of the changes which might take place in our much loved, but often-contradictory industry. It’s far too early to accurately gauge just what will happen, how retailers, publishers, and consumers will react, as well as to how far reaching the implications will be. One thing’s one certain though, it will make for a long and interesting debate, one which is sure to spurn on a wealth of ideas, along with an obligatory backlash and leaving many confused as to just what is going to happen.

With piracy, price discounting and preowned all presenting the industry each with its own set of problems, each interlinked with one another, it’s only fair that the industry finds new avenues to explore profit and self-preservation, whether it be with DLC, bonus code incentives for new games, or simply by thinking outside traditional consoles altogether.

Either way we at IQGamer will be following these events closely.

For more thoughtful discussion and insights into other issues surrounding the gaming world as a whole, be sure to check out for another informative read.

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